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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 73.59

-0.4%

11:42 AM EST

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To: chaz who wrote (62766)	1/24/2003 7:22:07 PM
From: Stock Farmer	Read Replies (2) of 77400

Great question chaz, Really great question! In precis, does it matter whether the company makes money or not, if there are folks out there willing to buy shares for more? Of course, answer is no. All it takes to make a good return on investment is to fob off my pieces of paper on someone else who pays more than I paid in the first place. Regardless of what the pieces of paper are worth. While it is possible to profit from the ignorance of others, the sum of the wealth changes of all participants must exactly equal the wealth generated by the firm, minus frictional costs of changes in ownership. The nature of reporting can therefore have no effect whatsoever on the total wealth change of the participants on average (e.g. goodness of the investment on average), however it has a profound effect on the distribution of this wealth between participants. It's a matter of paying attention to the odds at the table, rather than the current roll of the dice. Regards, John

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